Coalition tensions escalate amid Haredi demands for more funds ahead of budget vote

UTJ head reportedly threatens to thwart passage of budget — without which government will fall — unless Netanyahu government okays NIS 600 million ($164 million) more by Sunday

Housing and Construction Minister Yitzhak Goldknopf arrives for a meeting at the Prime Minister's Office in Jerusalem on May 7, 2023. (Yonatan Sindel/Flash90)
Housing and Construction Minister Yitzhak Goldknopf arrives for a meeting at the Prime Minister's Office in Jerusalem on May 7, 2023. (Yonatan Sindel/Flash90)

A standoff within the coalition over the upcoming deadline to pass the state budget escalated over the weekend, with the head of the United Torah Judaism (UTJ) party threatening to thwart its passage unless his demands for an additional NIS 600 million ($164 million) are met by Sunday.

The Knesset is preparing to vote on the 2023-2024 overall budget, allocating NIS 484.8 billion this year and NIS 513.7 billion in 2024, up from NIS 452.5 billion in 2022. Failure to pass the state budget by May 29 would trigger the automatic dissolution of the government and snap elections.

Citing promises made as part of the coalition deal with Prime Minister Benjamin Netanyahu’s Likud, the Agudat Yisrael faction of UTJ, led by party leader Yitzhak Goldknopf, has for days been threatening to pull out of the coalition and vote down the budget if it does not receive the demanded funds for full-time religious scholars in addition to the billions already pledged to the ultra-Orthodox community.

Goldknopf has insisted he was unwilling to compromise on the demand for additional funds and has given Netanyahu until Sunday to answer his ultimatum, Channel 12 news reported Saturday.

Unnamed senior coalition members were quoted as saying that revisiting the budget at this stage, after the lengthy process of approving it in the Knesset’s Finance Committee, would be “madness,” Channel 12 reported.

Agudat Yisrael has three lawmakers in the 120-member Knesset, meaning the 64-strong coalition can pass the budget without their votes. However, the faction has urged the other UTJ faction, Degel HaTorah led by Moshe Gafni, to join its demand.

UTJ MK Moshe Gafni leads a Finance Committee meeting at the Knesset, May 8, 2023. (Yonatan Sindel/Flash90)

Moreover, several reports have said Goldknopf was threatening to resign as housing and construction minister, allowing him to return to the Knesset as a fourth member of the Agudat Yisrael under the so-called Norwegian law, to vote against the budget. A Thursday report said Jerusalem Affairs Minister Meir Porush, also of the Agudat Yisrael factiion within UTJ, has threatened to do the same.

The Norwegian Law lets a number of cabinet members and deputy ministers from each government party resign their Knesset seats while they hold their ministerial posts. If a minister later resigns from the cabinet, they automatically return to the Knesset, requiring the lawmaker who replaced them in parliament to give up their seat.

Associates of Netanyahu and Finance Minister Bezalel Smotrich were reported Saturday to be estimating that the budget will end up passing without issue because coalition partners have no interest in toppling the government. Opinion polls have consistently showed current coalition parties would fail to get a parliamentary majority if elections were held now.

Smotrich has reportedly threatened to resign from his position if the Haredi parties receive the additional NIS 600 million ($164 million) in the upcoming budget. His office denied he made such a threat.

Neither Netanyahu nor Smotrich were planning to engage in dialogue over Goldknopf’s demands, Channel 13 reported Saturday.

Prime Minister Benjamin Netanyahu (left) and Finance Minister Bezalel Smotrich during a press conference, at the Prime Minister’s Office in Jerusalem, on April 30, 2023. (Alex Kolomoisky/Pool)

The Kan public broadcaster said Netanyahu’s aides were pressuring Gafni, head of the Degel HaTorah faction within UTJ, not to join Goldknopf’s threats, promising rewards for not doing so.

According to a Kan report on Thursday, Netanyahu has pressured the Finance Ministry’s Budgets Department head Yogev Gardos to meet with Porush to discuss the demands. The two did meet recently, but ministry officials are opposing the funds due to the potential harm to the economy.

Out of NIS 13.7 ($3.8) billion in discretionary funds approved by the government on Sunday, about NIS 3.7 billion is promised to be spent on increasing the budget for stipends at Haredi yeshiva student institutions, despite criticism that the community’s schools skirt full Education Ministry oversight and fail to teach core subjects to prepare students for the workforce, including math, science and English. Another NIS 1.2 billion is budgeted for private, non-supervised educational institutions, which also do not teach core subjects such as math and English.

About NIS 1 billion is directed as an allowance for a food voucher program being pushed by Shas party leader Aryeh Deri. Additional funds will be funneled for ultra-Orthodox education, constructing religious buildings, and supporting Haredi Jewish culture and identity.

Gardos has warned that the allocation of funds to ultra-Orthodox institutions and initiatives creates negative incentives for Haredi men to seek employment and will harm the country’s labor market and the economy as a whole.

Furthermore, Gardos has cautioned that if the employment participation rate among Haredi men is not encouraged, by 2065 the government will have to increase direct taxes by 16 percent to maintain the same level of services that it provides without increasing the deficit.

Shas leader Aryeh Deri leaves a hotel in Jerusalem after holding coalition talks with Religious Zionist chief Bezalel Smotrich and Likud head Benjamin Netanyahu, December 5, 2022. (Yonatan Sindel/Flash90)

Israel’s Haredi community, which makes up about 13.5% of the country’s total population, is expected to grow to 16% by 2030. The ultra-Orthodox population’s current growth rate of 4% is the fastest of any group in Israel, according to Central Bureau of Statistics data.

In addition to the UTJ, several coalition partners, including Itamar Ben Gvir’s far-right Otzma Yehudit party and the ultraconservative Noam party, have sought to leverage this fact to issue their own last-minute budgetary demands.

Ben Gvir has ordered Otzma Yehudit lawmakers to boycott Knesset votes in a bid to pressure allied parties to divert more funds to his party’s priorities in the budget — specifically the Negev and Galilee Ministry held by the faction.

Otzma Yehudit has griped that other parties are receiving billions for their projects while it has been given less for issues it wants to advance, particularly encouraging Jewish settlement in the country’s north and south.

Netanyahu and Ben Gvir met on Wednesday in an attempt to solve the dispute. According to Channel 12, the atmosphere was not positive — Netanyahu told Ben Gvir that there was no way to redirect the funds to his priorities.

Prime Minister Benjamin Netanyahu (left) with National Security Minister Itamar Ben Gvir in the Knesset in Jerusalem on March 6, 2023. (Yonatan Sindel/Flash90)

Noam’s sole lawmaker, Avi Maoz, also took his shot at swaying Netanyahu, threatening on Friday to vote against the budget if funds are not allocated to establish a “Jewish identity” unit, as the premier pledged when he agreed to join the coalition. Upon the government’s formation in late December, Netanyahu appointed Maoz — who heads the one-man, anti-LGBTQ Noam party — to become deputy minister in the Prime Minister’s Office with powers to establish “Jewish identity” programs in a new Jewish National Identity office.

Playing for unity, Netanyahu on Thursday said” “We’re not going to have better government, a good, nationalist government that is concerned with the future of the people of Israel.”

Speaking at a Thursday event attended by Smotrich and Ben Gvir at a Jerusalem yeshiva, Netanyahu said, “The time has come to stop with the threats, stop the boycotts, get off your high horse. To work together and pass the budget for the good of the people and the settlements. For the good of the people of Israel and the Torah of Israel.”

On Saturday, some 150,000 anti-government protesters rallied around the country, including against the priorities of the looming state budget.

Protest organizers said they would hold a demonstration near the Knesset on Tuesday during the discussion on approving the budget.

Carrie Keller-Lynn contributed to this report.

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